D'Arcy Gue

How to Manage An Outsourced ICD-10 Coding Program

August 12, 2014

ICD-10 4 Minute Read

Many hospitals have a difficult time maintaining a full coding workforce today. The reality is that the entire country will double its need for coders in the short term after the implementation of ICD-10 on October 1, 2015. This influx of demand means that maintaining a complete workforce will be a unprecedented challenge. Because of this, it makes sense to add coding resources to meet the permanent ICD-10 productivity loss, but it makes less sense to hire full-time resources to meet the temporary productivity impact, only to find yourself overstaffed in nine months.

For these reasons, many hospitals are turning to alternative strategies to help meet their coding requirements. Chief among them are Computer Assisted Coding (CAC) and outsourcing part (or all) of the coding workload.

Managing a diverse coding program,  where computers or outsourced staff perform icd-10 coding organizationsignificant parts of your coding can be challenging. In a traditional coding environment, where all the coders are employed by the hospital, coding is traditionally managed by two metrics — quality and productivity. In the diverse coding environment, however, we propose cost-per-chart as a replacement for traditional productivity measures.

Quality Management

The key to using a quality management program in the diverse coding environment is to apply your quality measures equally to all charts, without regard to which resource or resources did the coding. If you intend to use an outsourced coding vendor, quality requirements should be included the contract. To ensure these requirements are being met, you must audit the charts returned from the vendor. Some facilities have found that in limited circumstances (outpatient radiological procedures is one that I’ve seen touted by several vendors) CAC is accurate enough to be allowed to code without manual coding intervention. In this circumstance, the CAC charts should be audited similarly.

In all of these cases, the goals are the same:

  • Ensure that each coding resource provides correct, complete codes.  While you can expect that denials will provide some indication of coding quality, denials will not necessarily identify examples of under-coding, which can be costly for the organization.
  • Ensure the best coding skills, whether your staff or an outside resource can be used to improve the skills of the rest of your coding team.
  • Reassure your employed coding staff that technology and outsourced coding is being watched carefully for quality, just as they are.  If you have good internal staff, they can do the quality review for your outsourced resources, further improving the transparency of the quality program.
  • Ensure that any outsourced resources meet the quality standards specified in their contract.
  • Ensure that your charts are coded to standards that you would want to defend in a compliance audit.

Productivity Management

While quality management programs are relatively straightforward to manage across various resource types, productivity is a much greater challenge. CAC adds technology costs, while decreasing human labor costs for the same charts. Outsourcing resources may be contracted by the hour, or by the chart, which also complicates productivity measurements. The most straightforward solution to make direct comparisons between various coding resources is to calculate the coding cost-per-chart for each coding type.

Resource Costs to include
Employed Coders Labor, overhead, hardware, software licenses, rent, telecom, supervision, quality oversight etc.
Contracted Coders Contracted rate per chart (If hourly, divide by average or required productivity), quality oversight
CAC alone CAC costs, divided out per chart, quality oversight
CAC with coders Coding costs as above, plus CAC costs per chart

By calculating your total cost-per-chart, you get an apples-to-apples comparison of the costs for the various options, and the clearest measure of the bottom-line cost for each.

When Vendors Compete, You Win

Having complete and accurate quality and cost measures for each of your coding workflows allows you to employ an additional strategy for vendor management that is often used in other parts of the revenue cycle – having multiple, competitive vendors. To use this strategy, you negotiate with two vendors for the same coding services. The expectation is that one vendor will compete with the other to win the larger share (say 80%) of your business. The company with the smaller share is incentivized to improve quality or productivity to unseat its rival for the larger share of the business.

From the hospital’s perspective, this type of arrangement is often win-win. In addition to coding vendors competing to improve quality and lower price, you gain access to two vendors, lowering the overall risk to the organization should a vendor have difficulties that prevent them from meeting their contract goals.

Regardless of whether you decide to seek competing coding vendors, or go with one, if you are evaluating on-shore vendors, recognize that they are facing similar resource challenges. As a result, many vendors are reaching their projected capacity for the first quarter of ICD-10 coding. If you are planning to use on-shore outsourcing as part of your coding productivity strategy and you haven’t contracted yet, you need to do so quickly.

With the new official deadline, you should be re-invigorating your ICD-10 implementation efforts. If you’re looking for guidance, download our Re-Strategizing for ICD-10 Webinar.

This post was originally published on January 28, 2014, prior to the delay of ICD-10. It has been updated and republished for improved relevance.

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